Yarns

Took me 37 years, but I’m finally learning what everyone should learn as soon as they earn their first bit of coin. However, I've made it to 600 pages, and I've felt everyone one of them. Especially pages 300-450, they were tough! What I found so particularly arduous about that it was all new to me, and something I had kept at arms-length from a self-confessed lack of understanding. The old-adage is that when the world gets tough, the tough get going. Well when financials get mentioned, my brain packs a hamper and heads out to lunch.

Financial Brain Freeze

​What puzzles me though is why this is the case: why do not only I struggled, but many others? Other than being a good human being and learning to communicate successfully, I cannot fathom anything else more important. This is the first time I’ve made positive steps to learn about money and how to make it, save it, invest it for the future so that it worked for me. Is there a more fun way of getting that information? Probably. Have I found one? No way. In saying that, there is an excellent 30 minutes video about financials by Ray Dalio, someone that a few weeks ago I had never heard of, and I now revere.

Learning - Not Always Fun!

I’m learning Spanish as well at the moment, and I confess that I find listening to that less galling. There is nothing wrong with how Tony Robbins writes - his voice drips from the pages as does his endless enthusiasm. Anecdotes and quotes interlace well, yet the topic, for me at least, is like tucking into a dry cracker with filling made of sand. I have long, long understood that financials are effectively a tranquiliser harpoon for me: a kryptonite made of pure snooze. I have always believed this is because of lack of comprehension. And yet now I understand them more (being two-thirds of the way through the book), I have learnt and incredible amount and will endeavour, nay, make damn certain, I will pay attention to my finances and how to get the best out of them. . .but I still think finances should come packaged with radiation warning levels of ennui.

Never Too Late

And yet at 37 I'm cursing that I didn’t learn financials sooner, and am clinging to the hope that it’s never too late and that if the going is good, I have 40 more years of work and potential income to take matters into my own hand and rescue the situation. Here is hoping! <Kerrriissst, 40 years!>

​They key principles I do aim to take are these: save more in long term bonds; risk more in stocks through index trackers instead of gambling in individual bonds; waste less on things I hold no value for – to be balanced though with time, and the latter is something entirely new to me. Let’s tackle the first thing.

Spend On Things Of Value

​One of the things I don’t care generally for is food. My partners loves it, yet I eat to live not the other way around, so I can quite easily have some bread and tuna for lunch with an apple and orange and be more than satisfied. If lunches usually cost me $10 per day, I can usually change that to less (5 apples and 5 oranges are about $6, loaf of bread about 3.50, can of tuna 80 cents - my lunch now costs me about $2.50). So that saves $1600 a year . . . which really isn’t much! But if I can save a $1000 a year, about $80 a month (so only a 3/4 of my lunches are my own), invested at 5% return compound interest for 40 years . . . now we're talking. You'll have $129k as a nest egg. Not bad from putting away a few extra dollars a month. The calculator is actually pretty addictive once you get into it. Unfortunately kids, mortgages and any period of not working will heavily impact. But start small and look at the big picture, which is probably the biggest take out of the entire thing: think long term.

The Crux

​The trick is having money that is going to get you 5% returns. How do you do that? Through a balanced portfolio. Yes, every financial self-proclaimed guru talks of a blanaced portfolio, but what the hell does that actually mean? In this case portfolio meaning the money and assets you have i.e. don't gamble everything you have on one horse which may get shot at the first hurdle. Buy a house as an investment; invest in bonds; buy assets that don’t depreciate (brand new cars are a ridiculous waste of money, for example); and take some risks. And finally, probably one of the bits that I am guilty of and that I should do more, is treating myself – everyone likes that bit of the advice! Tony Robbins suggests that if you get a bonus, split it in thirds: one for the risk bucket (stocks); one for the growth bucket (bonds or guaranteed investments); and one for yourself.